| Nowadays,more and more companies start to hire persons with legal background as managers.According to the statistics,the proportion of executives with legal background in A-share listed companies rises from 5.07%in 2008 to 7.50%in 2016.In this context,We want to probe into the economic consequences of the executives with legal background.Based on the sample of A-share non-financial listed companies,this paper makes an empirical research on exploring the impact of executives with legal background on audit fee.The result shows that the legal background of executives significantly improves audit fee.When firms have more executives with legal background and larger percentage of those executives in management teams,firms pay higher audit fee.We think the possible reason is that:1)When the executives with legal background play the roles of the counselor,whose lower risk preference will reduce the risk preference of the entire management,thus causing the management to hire audit firms with higher reputation,or ask for auditors to increase audit test procedures in order to reduce audit risk,so the audit fee will increase.2)When the executives with legal background play the roles of the concealer,they may use legal expertise to help the management to hush up the deficiency in the internal control,thus reducing the enterprise's internal control quality,or indulge the management in tax avoidance,earnings management and other high-risk activities,thus reducing the enterprise's accounting information quality,so the audit fee will increase.After distinguishing property right,we find that this relationship only exists in state-owned companies.Further research shows that internal control,litigation risk and accounting firms' reputation can influence the relationship between the legal background of executives and audit fee in state-owned companies,and only accounting firms' reputation can influence the relationship in private companies.At the same time,no matter in the state-owned enterprises or private enterprises,earnings management don't influence the relationship between the executives with the legal background and audit fee.The innovation point of this paper is that:firstly,it expands the economic consequences of executives with legal background into a brand new filed;secondly,it divides the executives with legal background into three types of supervisors,consultants and concealers for the first time,and it also distinguish property right to test the economic consequences of the executives with legal background;thirdly,it enriches literature about company characteristics in the study of what influences audit fee. |
